Futures Markets:

A Futures Transaction Fee Is Administratively Feasible

GGD-94-40: Published: Oct 28, 1993. Publicly Released: Oct 28, 1993.

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Pursuant to a legislative requirement, GAO reviewed the feasibility of implementing a futures transaction fee to fund additional Commodity Futures Trading Commission (CFTC) enforcement and market surveillance activities, focusing on whether the fee will provide CFTC with additional resources to oversee the futures markets.

GAO found that: (1) a futures transaction fee is administratively feasible; (2) the cost for implementing a futures transaction fee will be minimal if exchanges collect and remit fees to CFTC; (3) CFTC will need regulations on how to define and administer transactions if a fee is to be implemented; (4) CFTC can use trading volume data to ensure that exchanges remit transaction fees to the Department of the Treasury; (5) factors that could increase implementation costs include requiring exchanges to audit members and take corrective action, vary the fee by type of market user, and complete extensive remittance paperwork; (6) the revenue generated by a futures transaction fee may not provide CFTC with the resources necessary to oversee futures markets unless the funds are specifically earmarked for CFTC oversight activities; (7) CFTC could be at financial risk if it becomes overly reliant on transaction fee revenues; and (8) although CFTC believes that a transaction fee would negatively impact the futures industry, the actual impact could not be determined.

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